Investor Tax Tips
365 tax strategies for rental property investors. One new tip every day.
Today's Tax Tip - #190
Partial 1031 Exchange Boot Rules
If you complete a 1031 exchange but receive some cash or non-like-kind property (called "boot"), you pay tax only on the boot received. For example, selling a $500K property and buying a $450K replacement means the $50K difference is taxable boot, but you still defer gains on the remaining $450K.
Read more →Deductions (59 tips)
#1
Mortgage Interest Is Deductible on Rentals
#3
Property Taxes Are Fully Deductible
#9
Repairs vs Improvements: Know the Difference
#16
Deduct All Advertising Costs
#19
Deduct Utilities You Pay for Tenants
#21
Deduct Legal and Accounting Fees
#25
Deduct Pest Control and Lawn Care
#29
HOA Fees Are Deductible on Rentals
+51 more tips in this category
Tax Planning (33 tips)
#26
Make Estimated Tax Payments Quarterly
#30
Watch Out for the 3.8% NIIT Surtax
#50
Cash-Out Refinance Is Not Taxable Income
#100
Close in December for a Full Year of Write-Offs
#111
Prepaid Expenses and the 12-Month Rule
#113
At-Risk Rules Limit Your Deductions
#120
Energy Efficiency Tax Credits for Rentals
#131
Prepay Property Taxes Before Year End
+25 more tips in this category
Depreciation (29 tips)
#5
Depreciation Reduces Your Taxable Income
#24
Depreciation Recapture When You Sell
#31
Appliances Depreciate Over 5 Years
#34
You Cannot Depreciate Land
#41
Section 179 for Rental Personal Property
#55
The Mid-Month Convention for Depreciation
#76
Land Improvements Depreciate Over 15 Years
#86
A New Roof Depreciates Over 27.5 Years
+21 more tips in this category
Capital Gains (23 tips)
#18
Understand Capital Gains Tax Rates
#59
You Can Deduct a Loss on Rental Property Sale
#79
Installment Sales Spread Out Capital Gains
#101
Abandonment Loss When Walking Away
#117
Tax Lien Investing Has Unique Tax Rules
#119
Opportunity Zone Investments Defer Capital Gains
#124
Section 1250 Unrecaptured Gain on Sale
#126
Avoid Dealer Status to Keep Capital Gains Rates
+15 more tips in this category
Passive Income (21 tips)
#11
Understand Passive Activity Loss Rules
#28
Real Estate Professional Status Unlocks Losses
#63
Seven Tests for Material Participation
#71
Suspended Passive Losses Carry Forward
#74
Group Rental Activities for Tax Benefits
#90
Use Passive Income Generators to Absorb Losses
#108
Active Participation: The $25K Loss Allowance
#122
Tenant-Paid Improvements Are Usually Not Income
+13 more tips in this category
Record Keeping (20 tips)
#2
Keep Every Receipt From Day One
#4
Separate Bank Account for Each Property
#14
Security Deposits Are Not Taxable Income
#32
Document Property Condition at Purchase
#42
Track Capital Improvements in a Spreadsheet
#56
Schedule E Reports Rental Income and Losses
#98
Use a Dedicated Credit Card for Rentals
#116
Do Bookkeeping Quarterly at Minimum
+12 more tips in this category
Entity Structure (18 tips)
#7
LLC Basics for Rental Properties
#65
S Corp Structure for House Flippers
#77
Your LLC Operating Agreement Affects Taxes
#110
Series LLC for Multiple Properties
#129
Partnership Returns Are Due March 15
#133
Never Commingle Personal and Rental Funds
#149
Recourse vs Nonrecourse Loans Affect Basis
#182
Tenancy in Common for Joint Ownership
+10 more tips in this category
1031 Exchange (18 tips)
#20
The 1031 Exchange: Defer Taxes on Sale
#44
1031 Exchanges Require a Qualified Intermediary
#58
1031 Exchange Three-Property Rule
#66
Partial 1031 Exchanges Are Allowed
#69
Like-Kind Means Almost Any Real Estate
#82
Reverse 1031 Exchange: Buy Before You Sell
#96
Combine Section 121 Exclusion with 1031
#156
1031 Exchange into a Delaware Statutory Trust
+10 more tips in this category
Short-Term Rentals (18 tips)
#23
The Short-Term Rental Tax Loophole
#48
The 14-Day Rule for Vacation Homes
#54
Airbnb and VRBO Report to the IRS
#73
Collect and Remit Occupancy Taxes
#85
Furnishing a Short-Term Rental Is Deductible
#109
Short-Term Rental Business Licenses
#137
Cleaning Fees Are Deductible for STRs
#148
STR Income May Trigger Self-Employment Tax
+10 more tips in this category
Property Management (17 tips)
#12
Deduct Property Management Fees
#33
Deduct Tenant Screening Costs
#46
Eviction Costs Are Deductible
#51
Deduct Cleaning and Turnover Costs
#78
Deduct Staging and Photography Costs
#94
Deduct Annual Maintenance Contracts
#112
Deduct Lease Preparation and Legal Costs
#118
Deduct Pool and Hot Tub Maintenance
+9 more tips in this category
State Taxes (14 tips)
#13
State Income Tax on Rentals Varies Widely
#40
File State Taxes Where Property Is Located
#93
Real Estate Transfer Taxes Vary by State
#104
States May Not Conform to Federal Depreciation
#155
Multi-State Properties Create Tax Nexus
#167
Foreign Rental Properties Have Special Rules
#181
Check for State-Specific Landlord Tax Credits
#194
State Income Tax Nexus for Out-of-State Rentals
+6 more tips in this category
Cost Segregation (14 tips)
#15
What Is a Cost Segregation Study
#37
Cost Segregation Pays for Itself Quickly
#45
Bonus Depreciation on Short-Life Assets
#68
Cost Segregation Look-Back Studies
#99
Combine Cost Segregation with Bonus Depreciation
#127
Personal Property Identified in Cost Segregation
#142
Cost Segregation on Major Renovations
#162
Cost Segregation Usually Requires $500K+ Value
+6 more tips in this category
Audit Protection (14 tips)
#39
Report Every Dollar of Rental Income
#47
Keep Tax Records for at Least Seven Years
#80
Keep a Contemporaneous Time Log for REPS
#92
How the IRS Selects Rental Returns for Audit
#150
Renting to Family Below Market Rate
#153
Avoid the Hobby Loss Rule
#184
Good Records Are the Best Audit Protection
#242
Digital Receipt Storage for Audit Defense
+6 more tips in this category
Estate Planning (14 tips)
#52
Step-Up in Basis Eliminates Capital Gains
#83
Holding Rentals in a Revocable Living Trust
#88
Gifting Rental Property Has Tax Consequences
#102
Irrevocable Trusts Remove Property from Estate
#106
Suspended Passive Losses Vanish at Death
#138
Charitable Remainder Trust to Defer Gains
#176
Family Limited Partnerships for Estate Planning
#206
Transfer on Death Deed to Avoid Probate
+6 more tips in this category
Insurance (12 tips)
#6
Insurance Premiums Are Deductible
#35
Umbrella Insurance Premiums Are Deductible
#61
Flood and Earthquake Insurance Are Deductible
#89
Casualty Losses from Natural Disasters
#105
Deduct Home Warranty Plans on Rentals
#132
Deduct Rent Loss Insurance Premiums
#199
Insurance Premium Deduction Timing
#212
Umbrella Insurance Policy Deduction
+4 more tips in this category
Closing Costs (12 tips)
#10
Closing Costs You Can Deduct Right Away
#62
Deduct Loan Points Over the Loan Term
#72
Title Insurance Gets Added to Your Basis
#107
Capitalize Interest During Construction
#136
Deduct Ongoing Notary and Recording Fees
#218
State Transfer Tax Deduction on Acquisitions
#231
Deducting Closing Costs on Refinance
#295
Deducting Title Insurance at Closing
+4 more tips in this category
Travel (10 tips)
#8
Track Mileage to Your Rental Properties
#27
Deduct Travel to Inspect Properties
#75
Use Actual Vehicle Expenses Instead of Mileage
#87
Meals While Managing Properties: 50% Deductible
#125
Deducting Out-of-State Property Visits
#158
Deduct Conferences and Networking Events
#189
Tracking Mileage for Property Management Drives
#240
Travel Expenses for Out-of-State Property Visits
+2 more tips in this category
Retirement Accounts (8 tips)
#22
Buy Real Estate in a Self-Directed IRA
#60
Solo 401(k) for Self-Employed Investors
#121
Self-Directed Roth IRA for Tax-Free Rental Income
#198
Self-Directed IRA for Rental Property
#244
Solo 401(k) for Self-Employed Landlords
#298
Roth Conversion Offset by Rental Losses
#322
SEP-IRA from Rental Management Income
#350
Backdoor Roth for High-Income RE Investors
Home Office (6 tips)
Self-Employment (5 tips)
Tax savings work best with the right financing
DSCR loan interest is deductible. See the lowest rate with no discount points paid from hundreds of lenders.